Clear Channel / iHeartmedia bankruptcy update

A few tidbits from the Tom Taylor newsletter along with having read the bankruptcy filing.

John Malone had his lawyers show up at the “First Day Motions” to represent his interests. The filing has language permitting Malone to submit his own plan, or other parties. That language may have been added to fend off an involuntary bankruptcy, as the four delays were starting to look like stalling.

The wild card in this fight is about $160 million in debt still outstanding from before the Bain & Lee “taking the company private” transaction. Since the freshly minted debt in 2008 trading as low as about 15% of face value (from memory), you can see why they would not have accepted a debt swap. They have been paid interest for 10 years, but are unsecured creditors.

Selling off Clear Channel Outdoors to a French company is definitely in play, at least the European part. The bankruptcy filing puts any further “raiding of the piggy bank” on hold. The 1 billion dollar IOU Iheart Media stuck on the books of CCO IS unsecured. The CCO subsidiary is 10% owned by others and has debt that may not get paid when the $1 billon “loan” becomes worthless.

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3 Responses to Clear Channel / iHeartmedia bankruptcy update

  1. Fred Stiening says:

    It looks like enough of the creditors are lining up behind the plan that was proposed by the senior lenders. CCO will be spun off and given to the secured lenders, and the unsecured will get a small portion of what is left.

  2. CC1s121LrBGT says:

    What the heck is iHeart? They have a web site and phone apps for the US and I believe their streams are geoblocked to prevent listening outside the US. The have a smaller web site in Australia and one in Canada. Both the Australian and Canadian sites feature stations from those countries that are geoblocked to prevent listening in the US and some stations that do allow listening in the US.

    From your reading or otherwise, do you know whether iHeart owns stations outside the US, or are they just providing a streaming platform to them as they do for some stations in the US? It will be interesting to see what will happen to Australian and Canadian assets of the company.

    • Fred Stiening says:

      It’s a very complicated question, and because iHeart isn’t publicly traded, much of what they do isn’t public or is kept firewalled. IHeart was the name given to try to rebrand Clear Channel. The Clear Channel Radio stuff was renamed using Iheart branding. Clear Channel Outdoors is the billboard / transit stop company that is another asset held by the mother ship corporation. 90% of the stock is held aside, and 10% is traded publicly, so the CCO entity has to file financial reports. There are publicly traded bonds which had SEC reports, but the complexity of all the shell corporations are overwhelming. Many of the radio stations are still licensed to their 1996 licensees. Part of the complicatin of the “going private” transaction, was Clear Channel lost their grandfathered status, so they had to put stations in the Aloha Trust, and trade stations, mostly with Cumulus (Grand Rapids Michigan I remember). The chart showing the relationships in the corporate hierarchy was something close to 10 levels deep.

      Bob Pittman’s strongest skill is brand development. Iheart Media is the brand. IHeartRadio is the part of Iheart in the Radio business, expanded to the app and indirect things like the Iheart Radio Awards and concerts.

      The bankruptcy filing listed 35 different corporations to be included in a consolidated bankruptcy process. I have already suggested that CCO is likely to either be incorporated or the judge will permit its sale, similar to the Cubs being sold before the Tribune bankruptcy was final. One of the primary objectives of the bankruptcy process is to preserve the value of the assets. Rather than the lender proposal, the judge might initiate an auction to sell off CCO and use the proceeds as part of the settlement of the other debts and get the viable company removed from the overall bankruptcy. The lenders might propose trading their debt for the 90% of CCO, and settling that before the final deal is approved.

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